Washington Report 012003

The U.S. General Accounting Office, the investigative arm of Congress, has been interviewing leaders of state trade associations, regulators and consumer advocates as part of its ongoing review to determine whether state laws adequately protect consumers or if federal regulation is necessary. The investigation was requested by Sen. Christopher Dodd (D-CT) and Rep. Mark Foley (R-FL), though both legislators subsequently introduced bills into Congress without waiting for the GAO to conclude its investigation and make recommendations. The bills, S. 3168 and H.R. 5743, were introduced on November 14 (see the November Washington Report for details) but expired a few days later when the 107th Congress adjourned. However, the ICFA understands that both Dodd and Foley intend to reintroduce the proposed legislation when the 108th Congress convenes this month.

GAO staff circulated a list of 37 questions to the groups they interviewed, including whether state associations had developed model guidelines or proposed legislation regarding any aspect of the death care industry. (Since 1998, the ICFA has circulated a series of Model Guidelines for State Laws and Regulations for use by industry trade associations). The questions also dealt with statistics, the types of state statutes and regulations currently in effect, administrative procedures (including licensing, certification and renewals), enforcement, consumer protection and whether the associations believed "there is a need for the federal government to take a more active role in regulating the death care industry." The GAO also asked, "What are your thoughts on whether the FTC's Funeral Rule should be expanded to cover cemeteries or other providers?"

So far, GAO staff has interviewed industry officials, regulators and consumer advocates in Georgia, Florida, New York, Hawaii and Texas. Meetings with similar representatives in California are also scheduled, and the GAO questionnaire may be circulated by e-mail to other states. The ICFA staff met with GAO investigators in July and provided them with data on state laws, model guidelines and other materials. The GAO staff expects to have its report published by July, and its findings may influence the progress of the Dodd/Foley legislation.

ICFA members will be kept informed of important developments through this column and through the bi-weekly ICFA WIRELESS e-mail newsletter.

Appeal to Keep Casket Sales Restriction Fails

by Robert M. Fells, Esq., general counsel

In early December, the U.S. Court of Appeals for the Sixth Circuit upheld a lower court ruling that a Tennessee law restricting casket sales exclusively to licensed funeral directors is unconstitutional. Specifically, the court held that the state law violated both the due process and equal protection clauses of the 14th Amendment to the U.S. Constitution. The case, Craigmiles v. Giles, originated in the late 1990s when the state funeral board issued a cease and desist order to two casket retailers in Knoxville and Chattanooga, declaring that by selling caskets the businesses were engaged in "funeral directing" although they employed no licensed funeral directors.

The casket retailers, assisted by lawyers from the Institute for Justice, filed litigation in the federal district court to overturn the state law, which generated national attention. Columnist George F. Will wrote that "requiring casket sellers to be funeral directors is like saying that only podiatrists can sell shoes." Subsequently, in 2000, the federal district court ruled in the retailers' favor, observing that a mortuary science college degree and an apprenticeship should not be necessary "to sell a box." The state board appealed the ruling to the Sixth Circuit court, claiming the law bore a "rational basis" to a legitimate government interest in protecting the public.

The appeals court rejected the board's arguments, saying the state's justifications for the law "come close to striking us with the force of a five-week-old, unrefrigerated dead fish." The court observed that "only a handful of provisions [in state laws] have been invalidated for failing rational basis reviews. ... We hold that this case should be among the handful."

This Tennessee decision is one of three federal court decisions reviewing similar laws. In 2000, a federal district court in Mississippi struck down that state's casket law, and a decision is currently pending on the Oklahoma casket law by a federal district court in that state.

The Tennessee board also argued that the law's coverage "of casket retailers provides for application of the Federal Trade Commission's Funeral Rule to casket retailers." However, the court held that the Funeral Rule "was designed to prevent package pricing by funeral homes, thereby forcing consumers to buy services that they did not want or need." The court also pointed out that the state legislature could have required casket retailers to comply with the Funeral Rule without imposing licensure requirements. Finding no rational relationship to a legitimate governmental purpose, the court concluded its review by finding that "we are left with the more obvious illegitimate purpose to which licensure is very well tailored. The licensure requirement imposes a significant barrier to competition in the casket market. By protecting licensed funeral directors from competition on caskets, the [state law] harms consumers in their pocketbooks. ... We invalidate only the General Assembly's naked attempt to raise a fortress protecting the monopoly rents that funeral directors extract from consumers."